The pending arrival of the 4G wireless technologies, particularly LTE-A but in general even the ‘4G-Lite’ versions of LTE and WiMax, foreshadows a fundamental change for the mobile phone industry. I’m not just talking about the move to flatter, IP-based architectures, or mobile connections approaching (or exceeding) 100Mbps, or the popularity of 3DTV. I’m talking about the demise of the mobile plan based on voice minutes. It is already becoming standard practice for the Operators to mandate data plans with the purchase of the latest smartphones.
In the next two years we are looking at a 50% growth in phones with Advanced OS (Android, iPhone, Blackberry OS, Symbian S60) which will continue to drive the push for mandatory data plans. These are data plans with values that can easily exceed the value of the voice plan for the same device. And they should – for a growing segment of the population, voice usage is dropping dramatically while data usage is skyrocketing (tell me something I don’t know, right?). So at what point do the voice minute plans become irrelevant for these data-oriented devices and voice-only plans become the entry-level point for the operators for base devices?
Operators could continue to offer ‘voice minutes’ as part of their plan but to what effect? When voice truly moves to IP, whether it is VoIP via Skype or some other program, just how does the operator actually MEASURE and thus value voice traffic? A circuit that can be measured in time is no longer set up, packets are sent only when there is something to be transmitted, so ‘time’ as a measure of a voice call becomes irrelevant. So how do you measure the value of the mobile connection? You COULD still use minutes to measure plan value, but with certain demographics using less and less ‘voice’ and more and more ‘data’ it would seem this is so, well, sooo 2010 and not 2012. Or soo 2G and not 4G. I’ll be watching to see how these plans develop.
If you attended, virtually or physically, Mobile World Congress last month in Barcelona then you already know where the industry is headed: tiered data plans. From the very first day where AT&T CTO John Donovan was quoted in the show daily ‘hinting’ that tier pricing would have to be implemented to keep up with the growth of data traffic to Bridgewater SVP David Sharpley coming up with not one, but EIGHT different billing options including having a ‘Congestion Charge Zone’ where you pay more when you enter an area of heavy usage. (Yep, that’s my favorite one. I can see it now: “Nope sorry, not going to stay at your hotel because you may be in the ‘Congestion Charge Zone’ and it will be too expensive for me to use my smartphone there. Bye”.) Not to be left off the bandwagon, ALU CEO Ben Verwaayen dutifully followed suit to say the equipment vendor also supports tiered pricing. Not sure why ALU felt it needed to comment, except I’m willing to bet that Ben’s IT department was not thrilled with that announcement (along with probably having their telecom services budget under pressure already).
Anyway… I’m still waiting for someone to announce what these tiers will be, and how users will be able to predict with ANY accuracy how much data they will use in a given month. Apps don’t come with a bandwidth rating. How much bandwidth does Google Maps use to direct me to the nearest Starbucks? 500k a mile? 2 MB a mile? What about after the next update? Will it cost me $5 in data charges just to get to my $5 coffee?
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